Date: 07/17/2000 3:31 PM
Subject: RE: File No. S7-24-99.
Jonathan G. Katz
Secretary, Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0609
*********************
July 17, 2000
Rule-comments@sec.gov
RE: Unregulated Short Sales by OTCBB Market Makers
Gentlemen:
I urge you to consider regulating short sales by OTCBB
Market Makers.
At present, OTCBB Market Makers have no reporting
requirements whatsoever concerning short sales. Short
selling serves many useful purposes in keeping our
financial markets in check. However, if it is unregulated it
can be subject to massive abuse.
I believe that the values of all OTCBB companies are
controlled by the market makers. Because the present
rules allow them to naked short a security with no
reporting requirement the market makers can continue to
short a security indefinitely, essentially betting that
they can outlast private investors. If the market maker
succeeds in "beating the will" out of private investors,
the market maker never has to cover its short position.
I am an active investor and I have seen countless abuses
by the market makers. Activities which should be
criminal are commonplace. I have seen companies report
block-buster earnings and news only to have its
share price decline. I have reviewed numerous time and
sales reports and have seen day after day of
investors buying shares of a security and the price of the
security drop lower and lower.
There is no justifiable reason to allow OTCBB market
makers to continue to short sell without regulation.
There should be reporting requirements as to how many
shares each market maker is short and limits
should be set so that a market maker cannot continue to
short millions upon millions of naked shares.
Please keep me informed as to the status of any proposed
regulations.
Very truly yours,
R. Vidal